AMC shareholders are wondering how much APE stock will be worth.
The dividend was announced during AMC’s 2022 Q2 earnings call and has received a lot of attention.
But there seems to be a lot of misinformation going around regarding the dividend, as well as some hard truths.
In this article I’m going to break down how much APE stock will be worth and what shareholders can expect in the coming weeks for AMC.
Let’s get started!
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Who will receive APE Stock?
AMC shareholders will receive 1 APE stock for every 1 share of AMC they hold at the end of the trading day of August 15th, per AMC’s press release.
Shareholders should see the new dividend stock reflect in their broker accounts the following week by Monday the 22nd.
APE stock is not a cash dividend which means shareholders will be able to trade the security like any other stock.
“These 516,820,595 new “AMC Preferred Equity units” will trade on the New York Stock Exchange with the symbol APE”, said CEO Adam Aron in a tweet earlier this month.
Shareholders who sell AMC stock prior to the closeout date will not receive APE stock upon the issue date.
Will APE expose synthetic shares?
There is a 50/50 chance APE stock will expose synthetic shares.
The reason being is that AMC Entertainment has already issued the 516.8 million equity units per outstanding AMC shares.
This means that the equity units already belong to every individual shareholder.
The problem will arise only when AMC shareholders do not receive APE stock.
If AMC shareholders only receive partial APE securities, then brokers will need to address the issue at hand.
An incomplete batch of APE stock could signify shareholders are indeed holding phantom shares.
But how likely is this scenario?
It’s very unlikely since naked shares tend to be transacted outside the lit exchange and are not traceable/recorded for the public.
Here’s what the CEO had to say regarding synthetic shares upon the announcement of this new equity unit.
The preferred equity dividend will go ONLY to company issued shares so if there are institutions holding synthetic shares, they will simply not receive APE.
How much will APE Stock be worth?
No, APE stock will not be worth $0.01 as many thought per AMC’s press release.
Adam Aron confirmed the “$0.01” referred to be merely a ‘placeholder’ used for technical legal terms.
APE stock will be worth approximately 50% of where AMC shares traded just before the dividend.
From there, market trading conditions will determine the ongoing share price of APE stock.
This means that if AMC traded at $25 per share before the dividend goes into effect, shareholders will see both AMC and APE stock reflect $12.50 per share each.
The value of AMC shareholders’ portfolios will not change but rather be divided in half by these two securities.
In other words, the value will be the sum of 1 AMC share plus 1 APE.
What’s up with Dilution rumors?
Is APE stock diluting AMC shares?
Yes and no.
While AMC shares are not being diluted, the introduction of APE stock allows the company to use half of the value of AMC shares to raise capital and pay down debt if they choose to.
Since shareholders have expressed they do not want to dilute AMC anymore, AMC Entertainment’s solution was to create a separate security (APE) from which they could use instead.
For the company, it’s a great fundamental move.
For shareholders, it means giving the company access to half of your capital.
Good or bad, this will depend on what the company means to each individual shareholder of course.
Some will be happy to play such an important role in the company’s growth and fundamentals, others not so much.
Many AMC shareholders purchased the stock to make money from a short squeeze so naturally there could be concerns.
Still, short sellers are betting against a company who are great at business and at raising capital, which is not ideal for them.
AMC Entertainment has proven time and time again Wall Street cannot stop their progress, growth, and innovation.
And where there are short sellers, there is a squeeze potential.
Final thoughts
Investors who purchased AMC stock to make some serious money must check-in with their conviction.
Although AMC’s share price will be divided in half, it will be up to investors to identify whether squeezing short sellers is still a priority.
And if it is, then APE stock should only be seen as another fundamental power move by the company to combat Wall Street opps (opposers).
Money should always be circulating, and that is what AMC Entertainment is successfully doing.
The question is, how will you as an investor allow your money to circulate and work for you?
That decision is yours and only yours to make.
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